The roll-out of 5G services may get a shot in the arm if industrial — rather than commercial — power tariffs are levied on telecom towers and telcos’ energy costs are reduced. While the proposal is endorsed by the Forum of (electricity) Regulators, the state electricity regulatory commissions (SERCs) will have to come out with necessary tariff orders.
Also, the state governments will have to provide for the subventions required to insulate the discoms from any adverse impact of the low tariffs, according to a Central Electricity Regulatory Commission official.
A working group under the Forum of Regulators — which includes both the CERC and SERCs — had recommended “rationalisation” of electricity tariffs for telecom towers. In July, the Digital Infrastructure Providers Association (DIPA), which includes tower companies such as Indus Towers, Summit Digitel, ATC Telecom, among others, had written to Union power secretary Alok Kumar seeking industrial-category electricity rates on telcos against the commercial rates being charged. Currently, commercial electricity rates are about `3 per unit higher than the industry category rates.
Power cost is a major part of the operational expenses of telecom service providers. “The rollout of 5G services by telecom operators will increase the load on the towers, thereby leading to a further rise in the costs,” an executive from a tower company said.
According to DIPA, Maharashtra is the only state which is said to be charging industrial-category electricity rates for telecom services.
In order to improve the financial health of discoms, the Centre is also considering new revenue streams especially with the upcoming rollout of 5G. “We are planning a cross-sector collaboration between the power sector and telecom sector, which will not only reduce the cost for telecom companies but discoms will also get a new revenue stream,” the official said.
Some of the recommendations from the Forum of Regulators to SERCs include monetisation of assets of power utility companies for telecom services. For example, telcos would have to install a lot of small cells to extend their 5G network, the same can be put up on electric poles and that can be a good revenue opportunity for the discoms.
Some telcos are already using the discom infrastructure such as fibres but that needs to be regulated by them, the official said, adding that it would take about 6-7 months for state regulators to largely make themselves prepare to utilise the 5G opportunity.